Recession Pares IT Budgets, but CIOs Keep Projects on Track

As the economic recession continues to deepen, double-digit budget cuts, hiring freezes and layoffs are becoming a fact of life in many IT departments. But some CIOs are managing to keep both their staffs and their rosters of ongoing IT projects largely intact - due partly to a desire on the part of business executives to use technology to reduce corporate costs and boost revenues.

For example, Dale Frantz, CIO and chief technical officer at Auto Warehousing, is having to cut his IT budget by 24 percent this year. AWC processes new cars for automakers and then ships them to dealers, and it's feeling the pain of the sharp drop-off in car sales. As a result, Frantz has frozen salaries and new hiring, eliminated most travel and put off hardware replacements and other capital spending until next year.

But Frantz said that he has been able to avoid workforce reductions thus far. And AWC is using the recession and the resulting business slowdown as an opportunity to expand its systems to some facilities that weren't heavily automated in the past.

The recession "isn't good for IT per se," Frantz said. "But we do have an opportunity to clean up the processes at facilities where things maybe weren't as efficient as they could be."

According to Frantz, AWC also has been able to protect IT workers and projects by reaping the cost-savings benefits of a high-profile conversion from PCs to Macintosh systems that it began two years ago. Savings on software licensing costs are starting to kick in now, he said, adding, "This turned out to be a great year to have that happen."

In addition, the Mac conversion provided AWC with new remote diagnostics tools that it's using to centrally troubleshoot and repair systems, instead of having to send IT staffers out into the field for fixes. And also in connection with the Mac rollout, the company is using server virtualization software on Apple's XServe systems to reduce the number of physical machines it has in place.

Viji Murali, CIO and vice president of information services at Washington State University, said she has been asked to cut her budget by 20 percent - and that's before school officials hold a two-day budget summit scheduled to take place on Wednesday and Thursday. As at AWC, the need for cutbacks has led to a salary freeze and a decision not to fill most positions that become vacant, Murali said.

The IT department hasn't put any ongoing projects on hold thus far, but Murali said it is slowing many down "enough to look at different ways of doing things." For example, Washington State recently switched from one application that cost US$200,000 in licensing fees annually to another that it found for half the price. And the new product is hosted by the vendor, providing a further savings on internal "people costs," she noted.

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